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Background

The Schedule III to the Companies Act, 2013 (2013 Act) became applicable to all companies for the preparation of financial statements for financial years beginning on or from 1 April 2014. The Schedule III provides general instructions for preparation of the balance sheet and the statement of profit and loss of a company.

The Ministry of Corporate Affairs (MCA) through a notification dated 16 February 2015 issued the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS Rules) which laid down a road map for entities (other than insurance entities, banking entities and Non-Banking Financial Companies (NBFCs) (corporate road map) for implementation of Ind AS (converged with IFRS) in a phased manner.

On 6 April 2016, MCA amended Schedule III to include general instructions for preparation of financial statements of a company whose financial statements are required to comply with Ind AS. The amendment divides Schedule III into two parts i.e. Division I and II:

Division I is applicable to a company whose financial statements are required to comply with the current accounting standards

Division II is applicable to a company whose financial statements are drawn up in compliance with Ind AS (Ind AS Schedule III).

The Institute of Chartered Accountants of India (ICAI) on 20 April 2017 issued an exposure draft on the Guidance Note (GN) on Division II - Ind AS Schedule III to the 2013 Act which was open for comments until 30 April 2017.

New development

The ICAI on 27 July 2017 issued the GN on Division II - Ind AS Schedule III to the 2013 Act. The primary focus of the GN is to provide guidance in the preparation and presentation of financial statements in accordance with various aspects of Ind AS Schedule III, for entities adopting Ind AS. The GN has been structured in the following categories:

Guidance on each of the line item of the balance sheet, statement of profit and loss

Major differences in Division I and Division II of the Schedule III to the 2013 Act